A money market account is a financial deposit account in which interest is paid to the account owner on the monthly balance in the account at a rate that is typically higher than regular savings accounts.
The rate at which interest is paid on money market deposit accounts is dependent upon the money markets, which consist of short-term financial assets such as treasury bills, money deposits, certificates of deposit, and other instruments for short-term financial exchanges that include the borrowing and lending of money equivalents as well as buying and selling arrangements that typically have transaction maturities that are less than one year.
Money market typically accounts have less flexibility than standard savings accounts. Owners of money market accounts are limited to six withdrawals per month under regulations from the Federal Reserve (Regulation D, which governs savings deposit accounts in the US) that govern how money market accounts operate.
Besides having a limit on the number of withdrawals that can be made each month from a money market account, there are normally more aggressive requirements for opening many money market accounts, including minimum balances that can be in the thousands and even tens of thousands of dollars. Money market accounts that have the most attractive interest rate terms normally require more financial commitment by the account owner, for instance, PurePoint Financial’s 2.35% APY money market account (one of the highest interest rates currently available) requires a $10,000 deposit to set up.
Interest Rates for Money Market Accounts
Interest rates vary among banks that make money market accounts available to their clients. For anyone who’s considering using a money market account to hold savings, it’s advisable to shop for terms that seem most appealing before committing to a particular money market account.
NerdWallet keeps an updated list of what it considers the best money market accounts currently available. That list will give you a solid idea of what interest rates and terms are competitive.